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Item 2. Management’s Discussion and Analysis

2023-04-27 compared with 2022-11-09 · 159 added, 263 removed, 282 unchanged (60% of the section changed)

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements convey management’s expectations as to the future of HGV, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time HGV makes such statements.

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HGV cautions you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond HGV’s control, which may cause the actual results, performance or achievements to be materially different from the future results.

Any one or more of these risks or uncertainties could adversely impact

HGV’s operations, revenue, operating profits and margins, key business operational metrics discussed under “— Operational Metrics” below, financial condition or credit rating.

Any one or more of these risks or uncertainties could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics discussed under “—Operational Metrics” below, financial condition or credit rating.

For additional information regarding factors that could cause HGV’s actual results to differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q, please see the risk factors discussed in “Part I—Item 1A.

Risk Factors” and the Summary of Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as supplemented and updated by the risk factors discussed in “Part II-Item 1A.

Risk Factors” of this Report and those described from time to time in other periodic reports that we file with the SEC.

Risk Factors” and the Summary of Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as supplemented and updated by the risk factors described from time to time in other periodic reports that we file with the SEC.

There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.

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Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries.

“Legacy-HGV” refers to our business and operations that existed both prior to and following the Diamond Acquisition (as defined below), excluding Legacy-Diamond.

“Legacy-Diamond” refers to the business and operations that we acquired in the Diamond Acquisition.

Except where the context requires otherwise, references to our “properties” or “resorts” refer to the timeshare properties that we manage or own.

Of these resorts and units, a portion is directly owned by us or joint ventures in which we have an interest;

the remaining resorts and units are owned by our third-party owners.

and the remaining resorts and units are owned by our third-party owners.

“Developed” refers to VOI inventory that is sourced from projects developed by HGV.

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“VOI” refers to vacation ownership intervals and interests.

"Collections" refers to the acquired portfolio of resort properties included in Diamond's single- and multi-use trusts.

Non-GAAP Financial Measures

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See “Key Business and Financial Metrics and Terms Used by Management” and “Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S.

We are a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand.

Our Company also owns and operates Diamond Resorts International (“Diamond”) and is in the process of rebranding Diamond properties and sales centers to brands that meet Hilton standards.

We are a global timeshare company engaged in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services, primarily under the Hilton Grand Vacations brand.

Our operations primarily consist of:

selling vacation ownership intervals and vacation ownership interests (collectively,

“VOIs”, “VOI”) for us and third parties;

selling vacation ownership intervals and vacation ownership interests (collectively, “VOIs” or “VOI”) for us and third parties;

financing and servicing loans provided to consumers for their timeshare purchases;

operating resorts and multi-resort trusts;

and managing our points-based Hilton Grand Vacations Club and Hilton Club exchange program (collectively the “Legacy-HGV Club”) and Diamond points-based clubs.

As of September 30, 2022, we have 154 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada, and Japan.

A significant number of our properties and VOIs are concentrated in Florida, Nevada, Hawaii, Europe, California, Virginia and Arizona.

and feature spacious, condominium-style accommodations with superior amenities and quality service.

As of September 30, 2022, we have approximately 344,000 Hilton Grand Vacations Club and Hilton Club members.

Legacy-HGV Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 18 industry-leading brands across approximately 7,000 properties, as well as numerous experiential vacation options, such as cruises and guided tours.

We also have 171,000 Diamond Club members who are able to utilize their points across the Diamond resorts, affiliated properties and alternative experiential options.

Diamond Acquisition

On August 2, 2021, we completed the acquisition of Dakota Holdings, Inc., the parent of Diamond (the “Diamond Acquisition”).

We completed the acquisition by exchanging 100 percent of the outstanding equity interests of Diamond into shares of HGV common stock.

Pre-existing HGV shareholders own approximately 72 percent of the combined company after giving effect of the Diamond Acquisition, with certain funds controlled by Apollo Global Management Inc.

(the “Apollo Funds” or, “Apollo”) and other minority shareholders, who previously owned 100 percent of Diamond, holding the remaining approximately 28 percent at the time the Diamond Acquisition was completed.

Diamond also operates in the hospitality and VOI industry, with a worldwide resort network of global vacation destinations.

Diamond’s portfolio consists of resort properties that we manage, are included in one of Diamond’s single- and multi-use trusts (collectively, the “Diamond Collections” or “Collections”), or are Diamond branded resorts in which we own inventory.

In addition there are affiliated resorts and hotels, which we do not manage, and which do not carry the Diamond brand but are a part of Diamond’s network and, through THE Club® and other Club offerings (the “Diamond Clubs”), are available for its members to use as vacation destinations.

The financial results within this report include Diamond’s results of operations beginning on August 2, 2021.

We refer to Diamond’s business and operations that we acquired as “Legacy-Diamond”, and our business and operations that existed both prior to and following the Diamond Acquisition as “Legacy-HGV.” See Note 3:

Diamond Acquisition for more information.

Acquisition and integration-related expenses represent direct costs associated with the Diamond Acquisition including integration costs, legal fees, financial and other professional services.

These expenses also include severance, retention and other employee-related benefits.

operating resorts and timeshare plans;

and managing our points-based Hilton Grand Vacations Club and Hilton Club exchange programs and the Diamond points-based multi-resort timeshare clubs and exchange programs.

During 2022, we began offering a new club membership called HGV Max across certain of our sales centers.

For any customer who purchases a VOI, this membership provides the ability to use points across all properties within our network.

The membership provides new destinations for existing club owners and broader vacation opportunities for new buyers.

It also combines the best benefits from our existing programs, new travel benefits, Hilton hotel discounts and benefits and alternative experiential options available to HGV Max owners.

Our club offerings, including HGV Max, are collectively referred to as “Clubs”.

As of March 31, 2023, we have over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada, and Japan.

A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada and Virginia and feature spacious, condominium-style accommodations with superior amenities and quality service.

As of March 31, 2023, we had approximately 519,000 members across our club offerings.

Based on the type of Club membership, members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort, any property in the Hilton system of 19 industry-leading brands across approximately 7,000 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program.

We operate our business across two segments:

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Real Estate Sales and Financing

Our primary Legacy-HGV product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

This ownership interest is an interest in real estate generally equivalent to one week on an annual basis, at the timeshare resort where the VOI was purchased.

Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties.

In addition to developing our own properties, we source VOIs through fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix focused on developed properties as well as fee-for-service and just-in-time agreements.

The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Legacy-HGV Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs.

Our primary product includes the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

This ownership interest is an interest in real estate generally equivalent to one week on an annual or biennial basis, at the timeshare resort in which the VOI is located.

Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties.

We source VOIs through developed properties and fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix.

The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs.

The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers.

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Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

We also source VOIs through our Collections product which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in our network for varying lengths of stay.

Purchasers of points generally do not acquire a direct ownership interest in the resort properties in our network.

For each Collection, one or more trustees hold legal title to the deeded fee simple real estate interests or the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements.

For the nine months ended September 30, 2022, sales from fee-for-service, just-in-time, developed inventory and points-based sources were 28 percent, 14 percent, 21 percent and 36 percent, respectively, of contract sales.

Another one of our products is the marketing and selling of beneficial interests in one of our Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection.

In general, purchasers of a VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection.

Rather for each Collection, one or more trustees hold legal title to the deeded fee simple real estate interests or the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements.

For the three months ended March 31, 2023, sales from fee-for-service and just-in-time inventory were 33%, and 17% of contract sales, respectively.

See “ Key Business and Financial Metrics and Terms Used by Management — Real Estate Sales Operating Metrics ” for additional discussion of contract sales.

The estimated contract sales value related to our inventory that is currently available for sale at open or soon-to-be open projects and inventory at new or existing projects that will become available for sale in the future upon registration, delivery or construction is approximately $12 billion at current pricing.

Capital efficient arrangements, comprised of our fee-for-service and just-in-time inventory, represented approximately 40 percent of that supply.

Capital efficient arrangements, comprised of our fee-for-service and just-in-time inventory, represented approximately 38% of that supply.

We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

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We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership.

We have approximately 60 sales distribution centers in various domestic and international locations.

A phased rebranding of sales centers that were acquired as part of the Diamond Acquisition began in late 2021 .

We have over 50 sales distribution centers in various domestic and international locations.

Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach.

We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products and have an affinity with Hilton (Legacy-HGV only) and are frequent leisure travelers.

We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products, are frequent leisure travelers, and have an affinity with our brands.

Tour flow quality impacts key metrics such as close rate and VPG, defined in “ Key Business and Financial Metrics and Terms Used by Management—Real Estate Sales Operating Metrics .” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables.

For the nine months ended September 30, 2022, 71 percent of our contract sales were to our existing owners.

We provide financing for members purchasing our developed and acquired inventory and generate interest income.

Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year , fully-amortizing loans that bear a fixed interest rate typically ranging from 2.5 percent to 25 percent per annum.

Financing propensity was 63 percent and 66 percent for the nine months ended September 30, 2022 and 2021.

For the three months ended March 31, 2023, 69% of our contract sales were to our existing owners, compared to 73% for the three months ended March 31, 2022.

We provide financing for members purchasing our developed and acquired inventory and generate interest income on the loans.

Financing propensity was 59% and 65% for the three months ended March 31, 2023 and 2022, respectively.

We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

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and Canadian borrowers at the time of origination were as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted-average FICO score 737 740

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When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Clubs.

Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions and our Timeshare Facility, which have in the past and may in the future provide funding for our business activities.

Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities.

In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets consisting of timeshare financing receivables that we service and related cash deposits.

For additional information see Note 5:

Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

In addition, we earn fees from servicing the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs and from our securitized timeshare financing receivables.

Timeshare Financing Receivables in our condensed consolidated financial statements.

In addition, we earn fees from servicing our securitized timeshare financing receivables and the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs.

Resort Operations and Club Management

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Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable.

Our management services include day-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets and projections and employee training and oversight.

Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10 percent to 15 percent of the costs to operate the applicable resort.

The fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy.

We are reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services.

The initial term of our management agreements typically ranges fro m three to five years and the agreements are subject to periodic renewal for one to three-year periods.

Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including reports, budgets and projections, arranging for annual audits and maintenance fee billing and collections and personal employment training and oversight.

Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10% to 15% of the costs to operate the applicable resort.

As a result, the fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy.

We are also reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services.

The original terms of our management agreements typically range fro m three to five years and

the agreements are subject to periodic renewal for one to three-year periods.

Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.

We also manage and operate the Clubs, including the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Legacy-HGV Club members, as well as the Diamond Clubs.

Since our inception, none of the management agreements relating to our owned or fee-for-service properties have been terminated or lapsed.

We also manage and operate the Clubs and exchange programs.

When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options.

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We measure our performance using the following key operating metrics:

• Contract sales represents the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price.

Contract sales differ from revenues from the Sales of VOIs, net that we report in our unaudited condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives.

We consider contract sales to be an important operating measure because it reflects the pace of sales in our business and is used to manage the performance of the sales organization.

While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our unaudited condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S.

Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives.

While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S.

GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently.

• We believe that the presentation of contract sales on a combined basis (fee-for-service, developed and points-based) is most appropriate for the purpose of the operating metric;

We believe that the presentation of contract sales on a combined basis (fee-for-service, just-in-time, developed and points-based) is most appropriate for the purpose of the operating metric;

additional information regarding the split of contract sales, is included in “—Real Estate” below.

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• Volume per guest (“VPG”) represents the sales attributable to tours at our sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow.

We consider VPG to be an

important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate.

For further information see Item 8.

Financial Statements and Supplementary Data - Note 2:

Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2021.

We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate.

EBITDA and Adjusted EBITDA

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(iv) share-based and other compensation expenses;

and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums resulting from purchase accounting, and other non-cash and one-time charges.

and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.

EBITDA and Adjusted EBITDA are not recognized terms under U.S.

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Results of Operations

Three and Nine Months Ended September 30, 2022 Compared with the Three and Nine Months Ended September 30, 2021

Three Months Ended March 31, 2023 Compared with the Three Months Ended March 31, 2022

Segment Results

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 20:

Business Segments in our unaudited condensed consolidated financial statements.

The following tables present our revenues by segment.

We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following tables set forth revenues and Adjusted EBITDA by segment:

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Real estate sales and financing $ 550 $ 452 $ 98 21.7

Resort operations and club management 299 216 83 38.4 870 403 467 NM

Resort operations and club management

302 268 34 12.7

Total segment revenues 852 720 132 18.3

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Total revenues $ 934 $ 779 $ 155 19.9

(1) NM - fluctuation in terms of percentage change is not meaningful.

(1) Refer to Note 16:

Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations.

The following table reconciles net income, our most comparable U.S.

Business Segments in our condensed consolidated financial statements for details on the intersegment eliminations.

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 16:

Business Segments in our condensed consolidated financial statements.

GAAP financial measure, to EBITDA and Adjusted EBITDA:

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Net income $ 150 $ 99 $ 51 51.5 $ 274 $ 101 $ 173 NM

Net income $ 73 $ 51 $ 22 43.1

Interest expense 44 33 11 33.3

Income tax expense 54 49 5 10.2 115 46 69 NM

Depreciation and amortization 57 48 9 18.8 181 71 110 NM

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 2 — 2 100.0 2 1 1 100.0

EBITDA 300 238 62 26.1 677 293 384 NM

Other loss, net (2) 20 (22) (110.0) (1) 22 (23) NM

Income tax expense 17 20 (3) (15.0)

Depreciation and amortization 51 60 (9) (15.0)

EBITDA 185 164 21 12.8

Other gain, net (1) (1) — —

Share-based compensation expense 10 11 (1) (9.1)

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Other adjustment items (1)

7 13 (6) (46.2) 48 20 28 NM

7 12 (5) (41.7)

Adjusted EBITDA $ 218 $ 202 $ 16 7.9

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) For the three and nine months ended September 30, 2022 and 2021 this amount includes costs associated with restructuring, one-time charges and other non-cash items.

This amount also includes the amortization of premiums resulting from purchase accounting.

(1) These amounts include costs associated with restructuring, one-time charges, the amortization of premiums resulting from purchase accounting and other non-cash items.

The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA:

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

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109 101 8 7.9

Adjusted EBITDA from unconsolidated affiliates 5 1 4 NM 12 8 4 50.0

Adjusted EBITDA from unconsolidated affiliates 3 3 — —

License fee expense (30) (25) (5) 20.0

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Adjusted EBITDA $ 218 $ 202 $ 16 7.9

(1) NM - fluctuation in terms of percentage change is not meaningful.

(1) Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

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Real Estate Sales and Financing

In accordance with Accounting Standards Codification (“ASC”) Topic 606, “ Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed.

In accordance with Accounting Standards Codification Topic 606, “ Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed.

The real estate sales and financing segment is impacted by construction related deferral and recognition activity.

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The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction:

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $

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Cost of VOI sales (deferrals) — (13) 13

3 — 3 (18) — (18)

Cost of VOI sales recognitions 1 — 1

Net Cost of VOI sales (deferrals) recognitions 1 (13) 14

30 73 (43) 12 50 (38)

Sales and marketing expense (deferrals) — (7) 7

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Net construction (deferrals) recognitions $ 2 $ (22) $ 24

(1) Includes anticipated Costs of VOI sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete for the three and nine months ended September 30, 2022 and 2021.

Real estate sales and financing segment revenues increased by $86 million and $807 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, sales revenue primarily increased in these periods due to an increase in travel demand and a

corresponding increase in tour flow and sales transactions;

partially offset by a net decrease in the recognition of deferred sales of VOIs related to projects previously under construction during the same periods in 2021.

Sales revenue for the nine months ended September 30, 2022 also increased as a result of the launch of new properties in the second half of 2021.

Real estate sales and financing Adjusted EBITDA increased by $15 million and by $314 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021, primarily due to the revenue increases discussed above.

Real estate sales and financing segment revenues increased by $98 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to an $87 million increase in VOI sales and commissions earned on sales of fee-for-service properties resulting from increased tours and availability of new inventory compared to the same period in 2022.

In addition, there was a $10 million increase in financing revenue primarily related to an increase in our loan portfolio and an increase in the weighted average interest rate.

Real estate sales and financing Adjusted EBITDA increased by $16 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the revenue increases discussed above.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the Real estate sales and financing segment.

Resort Operations and Club Management

Resort operations and club management segment revenues increased by $83 million and $467 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, the increase in resort operations and club management revenues was driven by greater resort management revenue from the launch of new properties in the second half of 2021 as well as an increase in Club members.

Resort operations and club management segment adjusted EBITDA increased by $3 million and by $120 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021, primarily due to the increase in resort and club management and rental revenues described above, partially offset by a by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity along with the launch of new club features and programs.

Resort operations and club management segment revenues increased by $34 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to an increase in rental revenue.

The rental revenue increase was driven primarily by an increase in the average nightly rates charged as well as an increase in occupied room nights compared to the same period in 2022.

The additional increase in Resort operations and club management revenue was due to an increase in resort management revenue, primarily driven by an increase in fees.

Resort operations and club management segment adjusted EBITDA increased by $8 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the increase in Resort and club management and rental revenues described above, partially offset by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the Resort operations and club management segment.

Real Estate Sales and Financing Segment

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance (1)

($ in millions, except Tour flow and VPG) 2023 2022 $ %

Contract sales $ 621 $ 433 $ 188 43.4 $ 1,747 $ 831 $ 916 NM

Contract sales $ 523 $ 509 $ 14 2.8

Fee-for-service sales (2)

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Net recognition of sales of VOIs under construction (3)

86 241 (155) (64.3) 34 167 (133) (79.6)

Fee-for-service sale upgrades, net 5 4 1 25.0

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(4) Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.

Contract sales increased by $188 million and by $916 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, the increase in these

periods was primarily due to an increase in tour flow corresponding with increases in travel demand related to new inventory available for sale at resorts that were opened in the second half of 2021.

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Contract sales increased by $14 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the increase in tour flow, partially offset by a decrease in VPG, and new inventory available for sale at our resorts during 2023.

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

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Sales and marketing expense, net (1)

246 174 72 41.4 644 316 328 NM

240 186 54 29.0

Real Estate expense $ 290 $ 226 $ 64 28.3

Real Estate profit $ 135 $ 112 $ 23 20.5

Real Estate profit margin 31.8 % 33.1 %

(1) NM - fluctuation in terms of percentage change is not meaningful.

(1) Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

Real estate profit increased by $20 million and by $283 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, these increases were driven by greater travel demand;

partially offset by a net decrease in the recognition of deferred sales of VOIs related to projects previously under construction.

The increase in real estate profit was also attributed to a higher mix of sales of VOIs at new properties and greater commissions earned on sales of fee-for-service properties compared to the same periods in 2021.

For the three and nine months ended September 30, 2022, cost of VOI sales decreased primarily due to a net decrease in the recognition of deferred cost of VOI sales related to projects previously under construction during the same periods in 2021;

partially offset with an increase consistent with the increase in sales revenue.

For the same periods, marketing revenue and other fees increased as a result of increased sales of vacation packages.

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Real estate profit increased by $23 million for the three months ended March 31, 2023, compared to the same period in 2022, driven by an increase of $87 million in Sales revenue and offset by an increase in Real estate expense of $64 million.

These increases are primarily due to an increase in Sales of VOIs, net, driven by the recognition of deferred properties under construction and an increase in commissions and brand fees earned on sales of fee-for-service properties for the three months ended March 31, 2023, compared to the same period in 2022.

Real estate expenses increased in line with the increases in the related revenues.

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Interest income $ 66 $ 55 $ 11 20.0

$ 61 $ 46 $ 15 32.6 $ 170 $ 108 $ 62 57.4

Other financing revenue 8 9 (1) (11.1)

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Consumer financing interest expense 11 7 4 57.1

11 8 3 37.5 26 22 4 18.2

Other financing expense 13 12 1 8.3

2 unchanged sentences

Financing profit margin 67.6 % 70.3 %

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) For the three and nine months ended September 30, 2022, this amount includes $7 million and $27 million, respectively, of amortization of the premium related to the acquired timeshare financing receivables resulting from the Diamond Acquisition.

(3) For the three and nine months ended September 30, 2022, this amount includes $2 million and $8 million, respectively, of amortization of the premium related to the acquired non-recourse debt resulting from the Diamond Acquisition.

Financing profit increased by $9 million and $46 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, financing revenue

increased due to an increase in the weighted average interest rate and an increase in the carrying balance of the timeshare financing receivables portfolio.

Financing expense also increased due to increased costs associated with loan servicing in addition to an increase in consumer financing interest expense resulting from an increase in the weighted-average interest rate compared to the same periods in 2021.

Financing profit increased by $5 million for the three months ended March 31, 2023, compared to the same period in 2022, driven by an increase of $10 million in financing revenue, partially offset by an increase in financing expense of $5 million.

Financing revenue increased primarily due to interest income driven by an increase in our loan portfolio and an increase in the weighted-average interest rate.

Financing expense increased in line with the related revenues and due to the increased costs associated with loan servicing.

Resort Operations and Club Management Segment

Resort and Club Management

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Club management revenue $ 51 $ 51 $ — —

Resort management revenue 82 57 25 43.9 229 94 135 NM

Resort management revenue 80 74 6 8.1

Resort and club management revenues 131 125 6 4.8

Club management expense 15 10 5 50.0

Resort management expense 34 18 16 88.9 87 27 60 NM

Resort and club management expenses 45 26 19 73.1 118 45 73 NM

Resort management expense 27 26 1 3.8

Resort and club management expenses 42 36 6 16.7

Resort and club management profit $ 89 $ 89 $ — —

Resort and club management profit margin 67.9 % 71.2 %

(1) NM - fluctuation in terms of percentage change is not meaningful.

Resort and club management profit increased by $12 million and $114 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, the increases in resort operations and club management revenues were driven by greater resort management revenue from the launch of new properties in the second half of 2021 as well as an increase in Club members and number of transactions;

partially offset by an increase in resort and club management expenses due to personnel related costs incurred to service increased transactions and the launch of new club features and programs.

Resort and club management profit for the three months ended March 31, 2023 remained consistent with the same period in 2022.

The increase in Resort management revenues were driven by an increase in fee revenue.

The increase in Resort and club management expenses is primarily due to personnel related costs incurred to service the increased transactions for the period.

Rental and Ancillary Services

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Rental revenues $ 157 $ 104 $ 53 51.0 $ 436 $ 184 $ 252 NM

Ancillary services revenues 2 8 (6) (75.0) 30 14 16 NM

Rental and ancillary services revenues 159 112 47 42.0 466 198 268 NM

Rental expenses 141 77 64 83.1 401 138 263 NM

Rental revenues $ 147 $ 124 $ 23 18.5

Ancillary services revenues 11 12 (1) (8.3)

Rental and ancillary services revenues 158 136 22 16.2

Rental expenses 143 122 21 17.2

Ancillary services expense 9 10 (1) (10.0)

Rental and ancillary services expenses 144 84 60 71.4 426 151 275 NM

Rental and ancillary services expenses 152 132 20 15.2

Rental and ancillary services profit $ 6 $ 4 $ 2 50.0

Rental and ancillary services profit margin 3.8 % 2.9 %

(1) NM - fluctuation in terms of percentage change is not meaningful.

Rental and ancillary services profit decreased by $13 million and $7 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Excluding the impact of the Diamond Acquisition, rental and ancillary services revenue increased in both of these periods due to an increase in average nightly rates charged in addition

to an increase in rooms available for rent corresponding with the launch of new properties during the second half of 2021.

Rental and ancillary services expense increased consistent with the aforementioned launch of new properties.

Rental and ancillary services profit increased by $2 million for the three months ended March 31, 2023, compared to the same period in 2022, driven by an increase of $22 million in rental and ancillary services revenue, partially offset by an increase of $20 million in rental and ancillary expenses.

Rental and ancillary services revenue was primarily due to an increase in rental revenue driven by an increase in the average nightly rates charged as well as increase in occupied room nights compared to the same period in 2022.

Rental and ancillary services expense increased consistent with the aforementioned increase in rental revenue.

Other Operating Expenses

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

General and administrative $ 42 $ 42 $ — —

Depreciation and amortization 57 48 9 18.8 181 71 110 NM

Depreciation and amortization 51 60 (9) (15.0)

License fee expense 30 25 5 20.0

Impairment (reversal) expense — 1 (1) (100.0) — 2 (2) (100.0)

(1) NM - fluctuation in terms of percentage change is not meaningful.

The change in other operating expenses for the three and nine months ended September 30, 2022, compared to the same periods in 2021 was driven by increased costs subsequent to the Diamond Acquisition and increases in expenses related to share-based compensation.

General and administrative expenses increased by $9 million and $66 million compared to the same periods in 2021, primarily due to increased salaries and wages expenses corresponding with an increase in team members associated with the Diamond Acquisition.

General and administrative expenses also increased due to expenses incurred associated with Performance RSUs during the three and nine months ended September 30, 2022, that were not incurred in the same periods in 2021 due to certain performance targets that were not expected to be achieved during that period.

Depreciation and amortization increased due to additional amortization expense recognized related to management contracts, club member relationships and trade names acquired as a part of the Diamond Acquisition.

License fee expense increased during the three and nine months ended September 30, 2022, compared to the same periods in 2021 due to improved results related to increased travel demand.

Impairment expense — 3 (3) (100.0)

General and administrative expenses for the three months ended March 31, 2023 remained consistent with the same period in 2022.

Depreciation and amortization decreased by $9 million, primarily due to decreased amortization expense of intangible assets.

License fee expense increased by $5 million, primarily due to increased applicable revenues.

Acquisition and Integration-Related Expense

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

Acquisition and integration-related expense $ 17 $ 13 $ 4 30.8

(1) NM - fluctuation in terms of percentage change is not meaningful.

Acquisition and integration-related costs include direct expenses related to the Diamond Acquisition including integration costs, legal and other professional fees.

Integration costs include technology-related costs, fees paid to management consultants and employee-related costs such as severance and retention.

For the three and nine months ended September 30, 2022, acquisition and integration-related costs decreased by $35 million and $34 million, respectively, due to decreased legal and professional fees incurred com pared to the same periods in 2021.

Integration costs include technology-related costs, fees paid to management consultants, rebranding fees and employee-related costs such as severance and retention.

For the three months ended March 31, 2023, acquisition and integration-related costs increased by $4 million due to rebranding fees incurred, co m pared to the same period in 2022 .

Non-Operating Expenses

Three Months Ended

September 30, Variance (1)

Nine Months Ended

September 30, Variance (1)

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $ %

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Equity in earnings from unconsolidated affiliates (3) (3) — —

Other (gain) loss, net (2) 20 (22) (110.0) (1) 22 (23) (104.5)

Income tax expense 54 49 5 10.2 115 46 69 NM

(1) NM- fluctuation in terms of percentage change is not meaningful.

The change in non-operating expenses for the three and nine months ended September 30, 2022, compared to the same periods in 2021 was primarily due to a year over year increase in interest expense as a result of the issuance of our senior secured credit facility in the third quarter of 2021, in addition to an increase in Other (gain) loss, net resulting from a loss on debt extinguishment of certain corporate indebtedness in the third quarter of 2021.

Income tax expense also increased consistent with the increase in income before income taxes in the same periods.

Other gain, net (1) (1) — —

Income tax expense 17 20 (3) (15.0)

The change in non-operating expenses for the three months ended March 31, 2023, compared to the same period in 2022 was primarily due to an increase in interest expense of $11 million, partially offset by a $3 million decrease in income tax expense.

For the three months ended March 31, 2023, Interest expense increased by $11 million driven by an increase in interest rates and net proceeds from debt, compared to the same period in 2022.

Income tax expense decreased due to discrete items for the three months ended March 31, 2023, primarily unrecognized tax benefits, compared to the same period in 2022.

Liquidity and Capital Resources

1 unchanged sentence

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with acquisitions and development projects, including rebranding.

We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our senior secured credit facility and our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

• In April 2022, we completed a securitization of $246 million of gross timeshare financing receivables.

The proceeds were primarily used to pay down one of our conduit facilities in full and for general corporate purposes.

Debt and Non-Recourse Debt for additional information.

• In May 2022, we amended and restated our Timeshare Facility agreement under new terms, which includes increasing the borrowing capacity from $450 million to $750 million allowing us to borrow up to the maximum amount until May 2024 and requiring all amounts borrowed to be repaid in 2025.

The Timeshare Facility is secured by certain timeshare financing receivables in our loan portfolio.

Debt and Non-Recourse Debt and Note 7:

Timeshare Financing Receivables for additional information.

• In August 2022, we completed a securitization of $269 million of gross timeshare financing receivables.

The proceeds were primarily used to pay down the remaining borrowings of our Timeshare Facility and general corporate operating expenses.

Debt and Non-recourse Debt for additional information.

• As of September 30, 2022, we had total cash and cash equivalents of $425 million, including $319 million of restricted cash.

• As of September 30, 2022, we had $999 million remaining borrowing capacity under the revolver facility.

• As of September 30, 2022, we had an aggregate of $750 million remaining borrowing capacity in total under our Timeshare Facility due in 2025.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects, including rebranding.

We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our revolver credit facility, our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

• During the three months ended March 31, 2023, we acquired a property in New York for $136 million from a third-party developer for inventory.

• As of March 31, 2023, we had total cash and cash equivalents of $752 million, including $363 million of restricted cash.

• As of March 31, 2023, we had $671 million remaining borrowing capacity under the revolver facility.

• As of March 31, 2023, we had an aggregate of $575 million remaining borrowing capacity under our Timeshare Facility.

Of this amount, we have $312 million of mortgage notes that are available to be securitized and another $279 million of mortgage notes that we expect will become eligible as soon as they meet typical milestones including receipt of first payment, deeding, or recording.

We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables, and provides the ability to be strategically opportunistic in the marketplace.

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand.

As of September 30, 2022, our inventory-related purchase commitments totaled $270 million over 8 years.

We have made commitments with developers to purchase vacation ownership units at a

future date to be marketed and sold under our Hilton Grand Vacations brand.

As of March 31, 2023, our inventory-related purchase commitments totaled $57 million over 2 years.

Sources and Uses of Our Cash

The following table summarizes our net cash flows and key metrics related to our liquidity:

Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2023 2022 $

4 unchanged sentences

Operating Activities

Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club and Diamond Club operations and providing related rental and ancillary services.

Cash flows used in operating activities primarily include spending for the purchase and development of real estate for future conversion to inventory and funding our working capital needs.

Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related rental and ancillary services.

Cash flows provided by operating activities primarily include funding our working capital needs and purchase of VOI inventory, including the purchase and development of real estate for future conversion to inventory.

Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs;

4 unchanged sentences

over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.

The change in net cash flows provided by operating activities for the nine months ended September 30, 2022, compared to the same period in 2021 was primarily driven by increased sales and operating performance compared to the prior year, as discussed above, in addition to an increase in net working capital from operations.

Net cash provided by operating activities was $26 million for the three months ended March 31, 2023, compared to $270 million in the same 2022 period in in the prior year.

The change was primarily due to our purchase of inventory from a third party developer, and increases in cash utilized for working capital, which is partially offset by an increase in net income during the three months ended March 31, 2023.

The following table summarizes our VOI inventory spending:

Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Total VOI inventory spending $ 152 $ 15

(1) For the nine months ended September 30, 2022 and 2021, our VOI inventory spending on owned properties relates to deeded properties that are classified as Inventory on our unaudited condensed consolidated balance sheets.

(2) Includes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects of $6 million and $4 million recorded in Costs of VOI sales for the nine months ended September 30, 2022 and 2021, respectively.

(1) For the three months ended March 31, 2023 and 2022, our VOI inventory spending on owned properties relates to deeded properties that are classified as Inventory on our unaudited condensed consolidated balance sheets.

(2) Includes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects of $3 million and $2 million recorded in Costs of VOI sales for the three months ended March 31, 2023 and 2022, respectively.

Investing Activities

The following table summarizes our net cash used in investing activities:

Nine Months Ended September 30, Variance

($ in millions) 2022 2021 $

Acquisition of Diamond, net of cash and restricted cash acquired $ — $ (1,585) $ 1,585

Capital expenditures for property and equipment (25) (11) (14)

Software capitalization costs (26) (14) (12)

Net cash used in investing activities $ (51) $ (1,610) $ 1,559

Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities in addition to capitalized costs

associated with rebranding Legacy-Diamond properties as a result of the Diamond Acquisition.

Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities.

We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

The change in net cash used in investing activities for nine months ended September 30, 2022, compared to the same period in 2021, was primarily d ue to costs associated with acquisition of Diamond in the third quarter of 2021.

Net cash used in investing activities was $11 million for the three months ended March 31, 2023 compared to $14 million for the three months ended March 31, 2022.

The decrease was due to decreased capital expenditures.

Financing Activities

The following table summarizes our net cash (used in) provided by financing activities:

Nine Months Ended September 30, Variance

($ in millions) 2022 2021 $

Issuance of debt $ — $ 2,650 $ (2,650)

Issuance of non-recourse debt 671 96 575

Repayment of debt (310) (843) 533

Repayment of non-recourse debt (824) (234) (590)

Debt issuance costs and discounts (12) (61) 49

Repurchase and retirement of common stock (162) — (162)

Payment of withholding taxes on vesting of restricted stock units (8) (5) (3)

Proceeds from employee stock plan purchases 2 1 1

Proceeds from stock option exercises 1 10 (9)

Other financing activity (2) (2) —

Net cash (used in) provided by financing activities $ (644) $ 1,612 $ (2,256)

The change in net cash provided by financing activities for nine months ended September 30, 2022, compared to the same period in 2021, was primarily driven by corporate debt drawn in connection with the Diamond Acquisition in the third quarter of 2021, in addition to the launch of our share repurchase program in the first half of 2022.

Net cash provided by financing activities for the three months ended March 31, 2023 was $183 million compared to net cash used in financing activities of $133 million for the same period in 2022.

The change is an increase of $316 million.

The increase was primarily due to an increase the net proceeds from debt of $288 million and lower repayments of

non-recourse debt of $115 million compared to 2022, partially offset by $85 million of share repurchases in the current year.

Contractual Obligations

Our commitments primarily relate to agreements with developers to purchase or construct vacation ownership units, operating leases, and obligations associated with our debt, non-recourse debt and the related interest.

As of September 30, 2022, we were committed to approximately $5,054 million in contractual obligations over 9 years, $312 million of which will be fulfilled in the remainder of 2022.

As of March 31, 2023, we were committed to approximately $5,111 million in contractual obligations over 9 years, $363 million of which will be fulfilled in the remainder of 2023.

The ultimate amount and timing of certain commitments is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances.

Commitments and Contingencies, Note 13:

Debt and Non-recourse Debt and Note 15:

Leases in our unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

We also intend to rebrand Diamond properties to brands that meet Hilton standards in accordance with the Amended and Restated License Agreement with Hilton.

Commitments and Contingencies and Note 10:

Debt and Non-recourse Debt in our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states.

The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating.

We have commitments from surety providers in the amount of $303 million as of September 30, 2022 which primarily consist of escrow and construction related bonds.

We have commitments from surety providers in the amount of $344 million as of March 31, 2023 which primarily consist of escrow and subsidy related bonds.

Guarantor Financial Information

Certain subsidiaries, which are listed on Exhibit 22 of this Quarterly Report on Form 10-Q, have guaranteed our obligations related to our senior unsecured 2029 Notes and 2031 Notes (together, “the Notes”).

The 2029 Notes were issued in June 2021 with an aggregate principal balance of $850 million , an interest rate of 5 percent , and maturity in June 2029.

The 2031 Notes were issued in June 2021 with an aggregate principal balance of $500 million, an interest rate of 4.875 percent, and maturity in July 2031.

The 2029 Notes were issued in June 2021 with an aggregate principal balance of $850 million , an interest rate of 5.000%, and maturity in June 2029.

The 2031 Notes were issued in June 2021 with an aggregate principal balance of $500 million, an interest rate of 4.875% , and maturity in July 2031.

The Notes were co-issued by Hilton Grand Vacations Borrower LLC and Hilton Grand Vacations Borrower Inc.

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Summarized Financial Information

($ in millions) September 30,

2022 December 31,

($ in millions) March 31,

Cash and cash equivalents $ 269

10 unchanged sentences

Intangible assets, net 1,244

Land and Infrastructure held for sale — 41

Other assets 453

8 unchanged sentences

Total liabilities $ 5,065

($ in millions) Nine Months Ended September 30, 2022

($ in millions) Three Months Ended March 31, 2023

Total revenues - transactions with non-guarantor subsidiaries $ 4

3 unchanged sentences

Subsequent Events

Management has evaluated all subsequent events through November 9, 2022 the date the unaudited consolidated financial statements were available to be issued.

Management has evaluated all subsequent events through April 27, 2023, the date the unaudited consolidated financial statements were available to be issued.

The results of management’s analysis indicated no significant subsequent events have occurred that required consideration or adjustments to our disclosures in the unaudited financial statements.

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S.

The preparation of our condensed consolidated financial statements in accordance with U.S.

GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis